By Michael Georgy

CAIRO (Reuters) - Vodafone Egypt plans to spend around 9.5 billion Egyptian pounds ($1.25 billion) on upgrading its network over the next three years to keep pace with demand for data services, its CEO said.

Vodafone Egypt, majority owned by British mobile operator Vodafone, is the leading communications player by customer numbers in the country of 90 million.

"Annual investments will represent more than 30 percent of annual revenues," Chief Executive Officer Ahmed Essam told Reuters in an interview.

"By end of this fiscal year in March, we would have spent more than 3 billion (Egyptian) pounds which equals one third of the allocated investments and also more than 30 percent of our yearly revenues in Egypt."

Financing the planned investments will come from internal resources, Essam added. He did not give precise revenue figures for a company which has around 39 million subscribers.

Investments would cover purchasing equipment, modernizing base stations and creating new coverage areas in Egypt, the most populous Arab country.

"This is a huge investment in comparison to what we used to spend," said Essam, adding the emphasis would be on "capturing the data growth".

Vodafone Egypt is also 45-percent owned by fixed-line telecoms firm Telecom Egypt. Egypt is finalising the details of a long-awaited unified license which will allow firms to offer both mobile and landline telecommunications.

Vodafone's rival mobile phone service providers are Mobinil and Etisalat Egypt. With Egyptians increasingly using mobile phones and the Internet instead of making fixed line phone calls Telecom Egypt has been relying on its data traffic for revenue growth.

Essam said Vodafone Egypt is interested in getting the Internet service offered under the unified license but has not decided yet if it needs the fixed line part.

He seemed upbeat on the Egyptian economy, which has just started to recover from nearly four years of political upheaval, street protests and militant violence triggered by the 2011 uprising which toppled autocrat Hosni Mubarak.

"I believe we are as a country on the front foot at the moment for encouraging investments coming in and encouraging trade," he said.

"GDP growth quarter over quarter is starting to tick. The confidence is starting to be there and it is reflected in the GDP"

Egypt can expect economic growth "easily north of 4 percent" in fiscal year 2014-15, which ends in June, boosted by rising confidence and a windfall from lower oil prices, its finance minister said in January.

(Editing by Keith Weir)